Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

I was fairly comfortable with our decision in August, and I am fairly comfortable with that decision in retrospect. Whether we were wise or we have been lucky is something only history will judge. I would be more comfortable if there were a slightly positive slope to expectations about the future path of policy and less certainty around that path, but I don’t know how to achieve that responsibly with language today. As Governor Kohn said, despite whatever discomfort one may have with that path in markets today, we can’t say that path is fundamentally getting in the way of our confidence or the world’s confidence in our capacity to achieve our objectives. So I’m comfortable with not moving today and basically fine with the language in alternative B.

I have just two other observations to make. It is striking that we have an asymmetry in the growth paragraph and in the inflation paragraph in that we have slipped into giving a forward-looking view about the likely path of inflation in a qualitative sense but have not done so in the growth paragraph for lots of reasons. I think that the asymmetry creates a bit of a problem for us today in trying to explain how we view the outlook and the risks to the outlook. The absence of any language about the future path of growth makes me more uncomfortable than I felt about the path today, and so I think we should come back and think about whether we want to correct that. Correcting that asymmetry might help a bit in explaining to the world any difference between the staff forecast, which will be clearly reflected in the minutes, and the implicit forecast of the Committee.

My second point is just about the minutes. I think that there is an issue regarding the minutes in that the staff forecast gets expressed with a clarity that is not expressed about the Committee forecast. The Committee forecast is necessarily described more vaguely: It’s harder to find what the center of gravity is, and even the tails don’t necessarily come through. We probably saw the reaction we did to the minutes last time because, even when the Committee’s judgment is much different from the staff’s, that difference is hard to characterize in the minutes. That is another topic for future discussion. Thank you.

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